Asset managers are expanding their product capabilities as fees on traditional funds shrink and growth shifts towards retail investors who seek comprehensive financial solutions rather than standalone investments.
In this highly competitive market, managers must branch out into new fund vehicles, customized solutions, diverse asset classes and other markets.
This rapid expansion is forcing traditional product providers to overhaul their businesses to handle the increased complexity.
As a result, many firms are reexamining how their product teams are structured, where incremental headcount is most needed, and how product development and management resources should be allocated, Boston-headquartered research and consulting firm Cerulli Associates says.
Research shows that 67% of managers in the United States segment product management functions while only 16% consider their current structure ideal. In response, many organizations are exploring hybrid approaches that align team design with factors such as asset class, vehicle and region.
“Among US managers, Cerulli is seeing growing interest in team structures that combine asset class and vehicle expertise,” says senior director Brendan Powers. “This shift is especially relevant for firms building capabilities in ETFs, interval funds, alternatives, and other areas that require deeper, more specialized product knowledge.”
Product development teams are also reassessing how they allocate time and where more resources are needed. More than half of their time is spent on new product innovation and implementation, with another 11% dedicated to enhancements or changes to existing products.
Staffing needs also vary by firm: large asset managers employ an average of nine product managers, while mid- and small-sized managers employ close to three. Larger firms average roughly seven product marketers and seven product developers, reflecting the broader organizational infrastructure needed to support larger product platforms.
"As product offerings expand, strategically allocating appropriate resources to the product function is becoming more important," says Powers.
"Cerulli expects firms that more deliberately align team structure, staffing and time allocation with changes occurring as a result of product complexity will be better positioned to support distribution, execute new product initiatives and maintain competitive relevance across vehicles, asset classes and client segments," he concludes.
